Introduction

As observed in Part I of our commentary, unjust enrichment continues to develop as a distinct and important branch of the law of obligations. Central to the inquiry where unjust enrichment is alleged is whether there is “enrichment” recognised at law at the expense of the plaintiff and, if so, when can that enrichment be considered “unjust” such that the law will intervene to provide relief. We accordingly discussed the illegality of the enrichment as an unjust factor in the light of the recent decision of the Court of Appeal (CA) in Esben Finance Ltd and others v Wong Hou-Lianq Neil [2022] SGCA (I) 1 (Esben).

We now turn to the lack of consent as an unjust factor. The CA also examined this in Esben and laid down the guiding principles to determine when lack of consent would be recognised as an unjust factor.

The decision in Esben was issued a few months after the questions surrounding lack of consent as an unjust factor arose in the High Court (General Division)’s decision in Ok Tedi Fly River Development Foundation Ltd v Ok Tedi Mining Ltd and others [2021] SGHC 205 (Ok Tedi). The Court in Ok Tedi decided in the 2^nd Defendant’s favour, striking out the plaintiffs’ unjust enrichment claims in respect of shares that BHP had transferred to it, primarily on the basis that the alleged enrichment was not made at the expense of the plaintiffs. As such, the question of lack of consent did not require a detailed examination. The CA’s decision in Esben therefore provided welcomed clarity on this area of the law.

Decision of the Court of Appeal on the unjust enrichment claims

As described in Part I of our commentary, the plaintiffs in Esben sought to recover some 50 payments on the basis that they constituted unjust enrichment. The CA dismissed the plaintiffs’ claims for 36 of those payments on the basis that there was no enrichment at the plaintiffs’ expense.

The CA further dismissed the plaintiffs’ unjust enrichment claims (UE Claims) for the remaining 14 payments founded on the plaintiffs’ lack of consent.

In doing so, the CA laid down several guiding principles for recognising lack of consent as an unjust factor. As a starting point, the CA observed that there is (in principle) no reason why lack of consent ought not to be recognised as an unjust factor. Otherwise, defendants who have received value or stolen property may benefit from a windfall. However, such recognition cannot be blanket and uncircumscribed. To do so would result in unacceptable encroachments on other areas of the law, denuding them of their legal significance. Further, legally valid transfers of the claimant’s property or value without his consent, or the retention by the defendant of the claimant’s property or value to which the defendant is legally entitled, cannot be said to have been per se unjust simply by virtue of consent being absent. Thus, an unjust enrichment claim based on the unjust factor of lack of consent would generally not be available where:

1. the transfer of the property or value in question from the claimant is a legally valid one;
2. the defendant is legally entitled (under a legal principle, rule or defence to any claim) to retain the property or value which is the subject matter of the claim; and
3. the claimant has any other available cause of action for the recovery of the property or the value in question under established areas of law (for example, the vindication of property rights). This follows from the need to prevent unjust enrichment from encroaching on or making otiose established areas of the law or denuding them of much of their legal significance.

In Esben, the CA found that the remaining 14 payments had been made to the defendant without any valid basis or authorisation. Thus, the plaintiffs retained property to the monies transferred by them. In the circumstances, the plaintiffs should have pursued a proprietary claim against the defendant instead of their pleaded claim in unjust enrichment. It was on this basis that the CA dismissed the plaintiffs’ UE Claims for these 14 payments. Further, as the plaintiffs did not plead a proprietary claim as an alternative cause of action, the CA observed that such a claim would potentially be barred by the extended doctrine of res judicata.

The interplay with other potential unjust factors

The reach of lack of consent as an unjust factor can therefore be limited by the scope of other legal doctrines. Where there is overlap, the mere fact that consent has not been given is unlikely to take precedence.

In Ok Tedi, the plaintiffs had sought to rely on ignorance as an unjust factor on the basis that they, being victims of certain alleged misrepresentations, were allegedly not aware of the true basis for the transactions leading to a transfer of assets to the 2^nd Defendant. The High Court (General Division) rejected the plaintiffs’ argument for two reasons. First, the plaintiffs’ consent was legally irrelevant because they had no proprietary interest in those assets. Thus, the enrichment was not made at the plaintiffs’ expense in the first place. In this connection, the Court’s decision to strike out the unjust enrichment claims was made on a similar footing as the CA’s dismissal of the UE Claims for the 36 payments in Esben. Apart from this, the Court in OK Tedi also held that the true substance of the plaintiffs’ case was one of vitiated intent, which ought to be considered under other unjust factors such as mistake and not under the rubric of lack of consent.

Similarly, the CA in Esben distinguished between mistake and lack of consent as an unjust factor in and of itself. Where the plaintiff’s case is based on an operative mistake – such as the alleged vitiated intent in Ok Tedi, the relevant unjust factor is that of mistake, even though the transaction concerned can be set aside because there has, ex hypothesi, been a lack of consent. To permit lack of consent amounting to a mistake in law to be an unjust factor in its own right and without any circumscription is not desirable, as it might well render other established unjust factors otiose or redundant. Thus, it was important to the CA that any recognition of lack of consent as an unjust factor cannot be made at the expense of denuding other established legal doctrines. At the same time, the existing doctrines may not be sufficiently adequate for a claimant seeking to recover value to which it does not have title. Seen in that light, the guiding principles formulated by the CA in Esben are meant to develop the law of unjust enrichment incrementally, while preventing it from encroaching on or rendering otiose other areas of the law.

Conclusion

A practical takeaway from both the CA’s decision in Esben and the High Court (General Division)’s decision in Ok Tedi is that plaintiffs considering a claim in unjust enrichment, based on their lack of consent, should evaluate whether such a claim would encroach on other areas of the law. Moreover, such plaintiffs would have to be mindful of the threshold questions, including whether there was enrichment at their expense in the first place, before going on to consider whether an unjust factor is present.

As observed in Wee Chiaw Sek Anna v Ng Li-Ann Genevieve [2013] 3 SLR 801, the law of unjust enrichment is still in a state of flux, being a relatively young doctrine as compared to other established areas of the law such as contract or tort. That said, there is no doubt about the increasing prominence of unjust enrichment given its continued development and its potential to establish liability without the benefit of enforceable contractual rights.

Dentons Rodyk acted successfully for the 2^nd Defendant in Ok Tedi, striking out the plaintiffs’ unjust enrichment claims in respect of shares transferred to it and a fund worth approximately US$1.48billion. The plaintiffs appealed against the decision (which is currently pending) but have withdrawn their appeal against, among others, the Court’s decision to strike out their unjust enrichment claims.